www.concordcoalition.org the concord coalition presented by jeffrey s. thiebert, national grassroots...

www.concordcoalition.orgTHE CONCORD

COALITION

presented by

Jeffrey S. Thiebert, National Grassroots Director

THE CONCORD COALITION www.concordcoalition.org

Federal Budget Briefing—ASMC PDI 2010


COALITION

About The Concord Coalition

The Concord Coalition is a nationwide, non-partisan, grassroots

organization advocating generationally responsible fiscal policy. The

Concord Coalition was founded in 1992 by the late former Senator Paul

Tsongas (D-Mass.), former Senator Warren B. Rudman (R-N.H.) and

former U.S. Secretary of Commerce Peter Peterson. Former Senator Bob

Kerrey (D-Ne.) became co-chair of the Concord Coalition in January

2002.


COALITION

Current Fiscal Policy

$1,800

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$0In b

illi

ons

of 1

996

cons

tant

(ch

ain)

dol

lars

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Fiscal Years


COALITION

Federal Revenue and SpendingFiscal Year 2009

Revenues Spending

Individual Income Taxes 26% Social Security 19%

Corporate Income Taxes 4% Health Care 22%

Payroll Taxes (SI, Medicare, & FICA) 25% International Affairs 1%

Other Taxes 5% Income Security 15%

Borrowed Funds 40% Education 2%

Total Revenue 100% Interest on the National Debt 6%

National Defense 19%

Environment 1%

Other Expenses 15%

TOTAL 100%


COALITION

Americans Want to Cut Spending – But Not on the Programs That Cost the Most

Source: The Economist/YouGov Poll, April 2010 and Congressional Budget Office, January 2010.


COALITION

Estate & Gift Taxes($21 billion)

Composition of Projected FY 2010 Federal Government Revenues and Outlays(Deficit: $1.35 Trillion)

Interest

Domestic*

Social Security

Medicare & Medicaid

Other Entitlements

Defense

Other TaxesCorporate Taxes

Social Insurance Taxes

Individual Income Taxes

Outlays: $3.52 trillion Revenue: $2.18 trillion*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid.

Source: CBO January 2010.


COALITION

Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget

All other Federal Spending

$2.09 Trillion

59%

Social Security, Medicare and Medicaid

$1.43 Trillion

41%

Source: Congressional Budget Office, January 2010.


COALITION

62% 31%

7%

40%

15%

45% 39%

6%

55%

Mandatory DiscretionaryNet Interest


Mandatory spending is consuming a growing share of the budget

1970 1990 2010


COALITION

Outlays of Select Mandatory Spending Programs (FY 2010 Projected)



COALITION

Change in Composition of Discretionary Spending

68%32%

60%40%

50% 50%

Defense Non-defense



COALITION

Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected)


*includes ground, air, and water

Education Transportation Housing, Natural Veterans Foreign Aid General Science, Energy & Resources Government Space & Nutrition Asst. Technology


COALITION

Non-Defense Discretionary Spending as a Percentage of GDP


As

a P

erce

nta

ge o

f G

DP


COALITION

Defense Discretionary Spending as a Percentage of GDP


As

a P

erce

nta

ge o

f G

DP


COALITION

Projected Growth in Entitlement Spending far Greater than Defense Spending

Source: Government Accountability Office and Congressional Budget Office. 2010.


COALITION

CBO March 2010 Baseline CBO’s Estimate of the President’s Budget

Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020)

CBO March Baseline Compared to the President’s Budget

Source: Congressional Budget Office, March 2010..

Average outlays: 21.0%

Average revenues: 18.3%

Per

cen

tage

of

GD

P

Actual Projected


COALITION

Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2011-2020

CBO March 2010 Baseline

The Concord Coalition Plausible Baseline adds in the effects of the new Health Care Reform law and assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, that Medicare physician payment cuts are postponed, and that all expiring tax provisions (including those from the 2009 stimulus package) are extended with AMT relief.

Source: Congressional Budget Office, March 2010 and Concord Coalition analysis.

Bil

lion

s of

Dol

lars

-$14.6 Trillion Deficit

-$6.0 Trillion Deficit


COALITION

Why Deficits Matter

• Reduce national savings• Increase dependence on foreign lenders• Increase burden on future generations:

– Through rising debt service costs;– By reducing productivity-enhancing

investments• Weakened ability to meet contingencies or new

challenges


COALITION

Debt Held by the Public as a Percent of GDP 1940-2040

Source: OMB Historical Tables 2009.

As

a P

erce

ntag

e of

GD

P


COALITION

Debt Held by the Public as a Percent of GDP 1940-2040

Source: GAO Analysis, 2010 and OMB Historical Tables 2010.

As

a P

erce

ntag

e of

GD

P

Actual Projected

World War II108.6% 2010

63.6%


COALITION

Percent of Debt Held by the Public Owned by Foreigners

(1987-2009)

Source: United States Treasury Department, Treasury Bulletin, December 2009.


COALITION

Interest Costs Go Through The Roof

Source: Congressional Budget Office, Analysis of the President’s Budget, March 2010.

Bil

lion

s of

Dol

lars


COALITION

Interest Costs Skyrocket Because of Recent Borrowing

The simulations assume that discretionary spending grows with the economy and that all expiring tax provisions are extended.

Source: Government Accountability Office, April 2008 and Feb. 2010.


COALITION

Americans are living longer and having fewer children

Consequently, fewer workers are available

to support each Social Security recipient

1960: 5.1 to 1 Today: 3.1 to 1 2029: 2.2 to 1

Source: Social Security Administration, May 2009.


COALITION

America’s Population is AgingPopulation age 65 and Over

Source: Social Security and Medicare Trustees’ Report, May 2009.

Year

Per

cen

tage

of

Pop

ula

tion

Age

d 6

5 an

d O

ver


COALITION

Health Care Costs are Rising Faster Than the Economy

Source: Congressional Budget Office, June 2009.

Per

cen

tage

of

GD

P

Historic Level of

Federal Revenues

Historic Level of

Federal Spending

Assumes that health care cost growth will not exceed GDP growth.

Assumes that health care cost growth continues at the average rate for the past 40 years (2.5 percentage points greater than GDP growth.)

Assumes that health care cost growth rate declines to 1.0 percentage point greater than GDP growth—consistent with the assumption used by the Medicare Trustees.


COALITION

Social Security Cash Deficits

Source: Congressional Budget Office, March 2010.

Bil

lion

s of

Dol

lars


COALITION

Social Security and Medicare Part A Cumulative Cash Surpluses and Deficits

In Constant 2009 Dollars — 2009 through 2085

In B

illion

s o

f C

on

sta

nt

20

09

D

ollars

2010 2020 2030 2040 2050 2060 2070 2080

Calendar Year

Source: Social Security Trustees’ Report—May 2009 (Intermediate Projections)

$147 Billion: Cumulative Social Security Cash Surplus

-$28 Trillion: Cumulative Social Security Cash Deficits

-$58 Trillion: Cumulative Medicare Part A Cash Deficits

-86 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits


COALITION

Medicare Costs Soar in the Coming Decades

Calendar Year

As

a P

erce

nta

ge o

f G

DP

General Revenues required to fund the program

Income from dedicated taxes, premiums, and state transfers

Source: Medicare Trustees’ Report, May 2009.


COALITION

Social Security, Medicare and Medicaid Cost Growth

Outlays as a Percentage of GDP

Social Security

Medicaid

Medicare

Source: Government Accountability Office, Feb. 2010.


COALITION

Social Security, Medicare, Medicaid and Interest Consume All Federal Revenues in Less Than 15 Years

Year

Per

cen

tage

of

Rev

enu

es

Social Security, Medicare and Medicaid Interest

Source: Government Accountability Office, February 2010.


COALITION

Current fiscal policy is on an unsustainable path

Federal Outlays as a Percentage of GDP

Social Security

Medicaid

Medicare

All OtherSpending

Interest

Source: Government Accountability Office, Feb. 2010.

Average tax revenue


COALITIONSource: Government Accountability Office, Feb. 2010.

Policy Changes Matter

Projected Debt Held by the Public as a Percent of GDP Under Alternative Scenarios (2010-2045)

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